In a surprising turn of events, shares of Apple (AAPL) experienced a notable decline of 3.6% at the close of trading in New York on Tuesday, marking the stock's steepest drop since August. This sudden downward trend came after Barclays downgraded the tech giant and reduced its price target for Apple's shares due to apprehensions surrounding slowing sales of the iPhone 15 in China.

Barclays analyst Tim Long expressed his concerns stating, "We are still picking up weakness on iPhone volumes and mix, as well as a lack of bounce-back in Macs, iPads, and wearables." Long highlighted the incrementally worse iPhone 15 data points from China, along with softness in developed markets as the primary reasons for the downgrade.

According to Long's analysis, even the upcoming release of the iPhone 16 later this year is unlikely to significantly boost sales as the anticipated model does not offer substantial upgrades compared to the current iteration. This projection aligns with the fact that Apple witnessed a decline of approximately $5 billion in iPhone revenue during 2023 when compared to the previous year.

The unfavorable sales performance was not limited to iPhones. Apple also experienced a drop in sales for Macs, iPads, and wearables, attributed partly to consumers feeling financial pressures from rising inflation and interest rates. Additionally, the PC industry suffered as the demand for new systems diminished, with a significant number of consumers having purchased laptops and desktops at the onset of the pandemic.

Further exacerbating Apple's concerns, Long expressed apprehension about the company's services business, which faces various impending challenges. One notable issue is related to Apple's App Store practices, as the company is being pressured to allow app developers to offer third-party payment options that would bypass Apple's 30% App Store fee.

Moreover, Apple's partnership with Google as the default search engine in its Safari browser might be at risk due to an ongoing antitrust case brought against Google by the Department of Justice. The lucrative deal, which generates billions for Apple, falls under the services business segment.

Nonetheless, Apple's services business showed growth, with revenues rising from $78.1 billion in 2022 to $85.2 billion in 2023. However, Long predicts that growth will start to slow down in the coming years, estimating only ~10% and ~8% growth in services for FY24 and FY25 respectively, significantly below prior growth estimates.

Beyond these challenges, Apple is currently embroiled in a patent battle with medical device manufacturer Masimo concerning the infringement of Masimo's patents related to the technology used in Apple Watch's blood oxygen sensor. The International Trade Commission previously called for a ban on the Apple Watch Series 9 and Apple Watch Ultra 2, but a federal appeals court has allowed Apple to continue selling these devices while the dispute progresses through the legal system.

Despite the potential hurdles, Apple's Vision Pro headset shines as a major prospect on the horizon. Expected to be launched during an event in February, the AR/VR headset, referred to by Apple as a spatial computer, has the potential to establish Apple as a leading company in the emerging field of computing devices.

Apple now faces the task of navigating these challenges and leveraging potential successes to maintain its position as a dominant player in the tech industry.